- Opening bank accounts
- AML consulting
- Business support
- Сompanies for sale
FIL 2020 is the primary source of regulation for foreign investment in China. The main areas of its application are:
Foreign investors can operate in China; however, on limited terms. It is mandatory for them to report all required information to the local financial regulators. Additionally, foreign investors can only invest in allowed sectors, not in those presented in the Negative List. Still, even investing in permitted sectors necessitates a license as well as compliance with national security and administrative conditions. Furthermore, investing in some sectors (such as military or agriculture) or conducting M&A operations requires undergoing a national security audit.
When it comes to enterprises with FDI, they must be registered and obtain approval from relevant market regulators.
Those foreign investors who would like to perform M&A deals in China must submit these documents for their NDRC application (national security audit):
Several steps of security verification must be taken to register a company for investment activities in China. Once an application for verification is received, the NDRC issues a preliminary decision. Sometimes an audit is considered necessary. Then an applicant receives notification within two weeks. After the notification, an applicant has up to five business days to send the regulator a joint ministerial meeting application.
If it was decided within a review period of 30 days that there is no threat to China’s national security, the NDRC authorized an M&A deal. But if it was not, a review process of 60 days starts.
If an operation like a transaction or transfer of shares is considered threatening to national security, investors should keep in mind that it must be terminated.
In addition, after a decision on the security review was made by the regulator, it cannot be appealed and is deemed final.
It is crucial to remember that the distribution of confidential information received during an M&A transaction is strictly prohibited in China. Violation of confidentiality is penalized by disciplinary actions or even criminal charges, in case it was proved to cause considerable damage.
Do you need advice on investment regulation in China? Seeking to start an investment business in China but getting confused over FIL 2020? Contact COREDO to receive a personal high-quality consultation.